After a long journey of distance learning, the UEF members have finally reunited! Today, the members of the UEF gathered around to discuss how countries are responding to COVID-19. Members were to read an article called “Coronavirus weekly: where are countries finding the money to mitigate economic catastrophe?” published by The Conversation. This article happened to tie into the unit the UEF members are currently learning about.
During distance learning, each wrote a policy paper to address the issues of economic growth, unemployment, and income distribution. These are core topics of Macroeconomics and options to explore further in the upcoming Internal Assessment write-up. By discussing the article with each other, members expanded their understanding off of each other and applied it to an ongoing issue. With their economic hats on, they evaluated the implications of mentioned policies as well as suggested alternative policies to promote economic recovery.
From this discussion, members extracted similar takeaways that exposed weak spots in the economic system. Trends show that remote working is more feasible for jobs in the higher income bracket. This means that social distancing puts most pressure on the lower-income individuals who cannot continue working effectively in the labour force as their work requires more physical interactions. Hence, they may be unable to sustain a stable means of pay.
Since consumption is believed to be what drives an economy, economic recovery may depend on consumer confidence disproportionally to other determinants of aggregate demand. Consequently, many demand-side economies are choosing to adopt expansionary fiscal policies to directly encourage expenditure this way. In other words, governments are funding for consumers to increase aggregate demand. However, this comes at costs which differ in the short, medium, and long-term.
Ultimately, members identified with the responsibility of policy-makers to address each affected stakeholder in the economy. Now we invite you to take on the role of a policy maker too.
What would you do? Which policy should be implemented to uplift an economy from recession and to what extent?
By Phuong Thao Do and Seung-won (Rosan) Kim